Investors are no longer able to put any new money - except reinvested dividends - into a PEP, but you can still switch investments and transfer your PEP to another manager without incurring income or capital gains tax.

You may decide to switch PEP managers on the grounds of poor performance, to improve the balance of your PEP portfolio, if you want to change investment strategy or in order to simplify administration by consolidating all your PEP investments with the same plan manager.

However, investors should also consider counter arguments before rushing to the transfer market, particularly the long-term performance prospects of the various PEP investments they hold and the attractions of spreading risk across a number of managers.

While the investment performance and suitability of the new PEP manager are of principal importance, you should also consider the costs of transferring. While the trend among fund management groups has been to reduce, and often abolish, entry fees to their PEPs, a substantial number still make hefty charges for early withdrawals.

Charges of up to 5 per cent are not uncommon if a plan is cashed in during the first year. Some management groups extend the penalty period for up to five years. A handful of fund managers will only apply the charge to your initial investment, leaving any capital growth untouched.

Administration fees of between £25 and £50 are often charged on transfers out, while investors with share PEPs may find their stockbroker adds dealing charges to the transfer bill or a fee of up to 2 per cent to cover the cost of re-registering the shares in the new plan manager's name. The more shares you have in your plan, the more expensive it is likely to be to switch.

One way to cut down on transfer costs might be to consider switching to another PEP offered by the same management group, as this will usually attract a discount. However, there will not always be a suitable 'in-house' alternative.

Investors wishing to transfer should always approach the new plan manager first with their request. It is not unknown for investors accidentally to cash in their PEP plans and lose their allowances because of a misunderstanding with their old plan managers

Under Inland Revenue rules, investors must transfer all of their investment within a PEP and where plan mangers have bundled all your PEPs together to simplify administration, you must transfer it all. So investors in this situation cannot switch just one or two of their fund holdings to another company, they must move the whole lot.